Detroit could face lawsuits from some pot shops forced to close | Michigan Radio
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Detroit could face lawsuits from some pot shops forced to close

Apr 2, 2018

The city of Detroit may face a slew of new lawsuits, as medical marijuana dispensaries without permits are forced to shut down.

The state sent to cease and desist letters to 211 medical marijuana dispensaries last week. 161 are in Detroit. The reason: those establishments failed to get local permits before the Feb. 15 deadline to apply for state licenses.

But a “significant handful” of those Detroit dispensaries are not fly-by-night operations flouting the rules, says Michael Stein, an attorney representing some marijuana dispensaries. Instead, Stein says they were stuck in the middle of Detroit’s permitting process.

“Detroit has a significant amount of dispensary businesses that should be allowed to stay open because they’re going through the process,” Stein said.

“Those are not bad actors. Those are people who are not open illegally. They’re businesses that simply have not had time to complete the process to get their application into the state by the Feb. 15 deadline.”

Stein says some of those dispensaries had conditional approvals from the city when the state deadline rolled around, but couldn’t apply for state licenses because they didn’t get a chance to get a final decision from Detroit’s zoning board.

“They just haven’t had an opportunity to complete the process. Their failure to complete the process has nothing to do with them. It simply has to do with the city of Detroit’s scheduling,” argued Stein, who calls Detroit's permitting process “punitive.”

Ironically, Stein says some dispensary clients that were denied by the city’s zoning board were actually able to apply for state licenses because they were on record with pending appeals.

But now that all other non-permitted dispensaries have been forced to close, Stein says those caught in the permitting process have no recourse except suing the city.

“The only other option that these clients are going to have to look at is a suit for damages against the city of Detroit,” he said. “And I think that’s the next wave of lawsuits that you’re going to start to see.”

It’s not known exactly how many dispensaries are in this situation. The city of Detroit’s corporation counsel was not immediately available to comment on the matter last week.

The city told the Detroit News that Detroit has permitted 70 marijuana dispensaries so far.

Compounding the situation is the legal confusion surrounding Detroit’s permitting process, which was muddled last November when voters approved two ballot measures pushed by the medical marijuana industry.

Among other things, the measures undid portions of Detroit’s existing medical marijuana business ordinance, which put strict zoning limitations on where dispensaries can locate, and removed the zoning board from the permitting process. However, a Wayne County judge threw out those portions of the voter-approved rules in February, ruling that zoning decisions are reserved for local elected officials.

That happened the same week that Detroit put a 180-day moratorium on permitting dispensaries, citing the legal confusion surrounding the issue.

Some Detroit elected and community leaders who pushed for the city’s original ordinance argued that areas of the city had become saturated with unregulated pot shops that posed a dangerous nuisance to surrounding neighborhoods. But the restrictions sparked pushback from medical pot advocates and the marijuana industry, leading to the ballot proposals. A hearing in the ongoing court case over the ballot initiatives is scheduled for later this month.